As most readers know by now, two federal appeals courts on Tuesday reached the opposite conclusions about the validity of the critical financial subsidies on the ACA’s federal health insurance exchanges. The Fourth Circuit in Virginia upheld the subsidies—indicating the government had the better argument, but regardless applying the longstanding rule that when a statute is not clear, courts defer to the agency administering the statute (in this case, the IRS). The D.C. Circuit, however, ruled the other way, reading one provision of this massive and complex federal law out of context. That opinion not only misinterprets the statute—with enormous practical consequences—but also does a deep disservice to conservative jurists and lawyers who have spent the last 30 years arguing that text-based interpretation is sophisticated, not literalistic, and serves democracy.
The stakes are enormous: If the D.C. Circuit’s opinion ultimately carries the day, more than $36 billion dollars in financial relief will be denied to the approximately 7 million people expected to be insured with the help of this financial assistance. It also places Republicans in a real dilemma, especially as the election cycle heats up: The result, if the ruling stands, would be massive red-state/blue-state disparity, as millions of middle-class Americans are deprived in red states of access to medical care, because it is mostly the red states whose subsidies are now at issue.
As I wrote yesterday on Balkinzation, the opinion is terribly disappointing from a statutory interpretation perspective. It relies in part on irrelevant legislative history (from the HELP committee, whose bill wasn’t even the basis for these provisions–the Finance committee’s was) and gets it wrong anyway (as I argued here); it bends over backwards to come up with reasons why Congress might have intended this result (which we all know it certainly did not); and it attaches far too much significance to a line in the statute that expressly deems exchanges in the territories to be state exchanges and does not replicate the special deeming language for the federal exchanges. The territories language is boilerplate language used by Congress when talking about territories in statutes even beyond the ACA, and should have been attached no significance here.
For a more detailed legal and political analysis, check out my op-ed on the cases.